NZIER’s Shadow Board more certain that OCR should remain unchanged

11 February 2019

By Christina Leung

New Zealand Institute of Economic Research (Inc)
Media release
For release 10am Monday 11 February 2019

NZIER’s Monetary Policy Shadow Board’s view on the Official Cash Rate (OCR) continues to be firmly on no change ahead of the Reserve Bank’s Monetary Policy Statement on Wednesday.

“Heightened global uncertainty, with the escalating trade tensions between the US and China and concerns about slowing growth in the Chinese economy, has meant Shadow Board members now see a reduced need for higher interest rates. This is reflected in the reduced tightening bias going into this OCR decision.
Inflation pressures have lifted, and business confidence is recovering, but the increased downside risks to the growth outlook means the Reserve Bank is likely to remain cautious as to when it starts to normalise monetary policy by lifting interest rates. There remains the potential for an OCR cut should economic conditions deteriorate.” said Christina Leung, Principal Economist at NZIER.

“Recent developments suggest the Reserve Bank will keep the OCR on hold until 2020 as it assesses how the risks will play out.”

Figure 1 More conviction around an unchanged OCR

* distribution may not add up to 100% due to rounding

Source: NZIER Monetary Policy Shadow Board

Figure 2 Individual participants’ recommended rate settings – 7 February 2019

Source: NZIER Monetary Policy Shadow Board

Table 1 Participant comments

Participant comments are always optional and can be limited to 60 words

Source: NZIER Monetary Policy Shadow Board

About the NZIER Monetary Policy Shadow Board

NZIER’s Monetary Policy Shadow Board is independent of the Reserve Bank of New Zealand. Individuals’ views are their own, not those of their respective organisations. The next Shadow Board release will be Monday 25 March, ahead of the RBNZ’s OCR Review. Past releases are available from the NZIER website:
Shadow Board participants share out 100 points across possible interest rates to indicate what they believe is the most appropriate Official Cash Rate setting for the economy. Combined, these scores form a Shadow Board view ahead of each monetary policy decision.
Participants show where they think interest rates should be, not what they believe will happen.

The NZIER Monetary Policy Shadow Board aims to:

  • encourage informed debate on each interest rate decision
  • help inform how a Board structure might operate
  • explore how Board members could use probabilities to express uncertainty.

For further information, please contact:
Christina Leung, Principal Economist & Head of Membership Services, 021 992 985